Obama Says U.S. Needs Revenue Along With Spending Cuts

President Barack Obama speaks in the Eisenhower Executive Office Building about the budget in this file photo. Photographer: Andrew Harrer/Bloomberg

Feb. 4 (Bloomberg) -- President Barack Obama said there is
“no doubt” the government needs new revenue from closing tax
“loopholes” and limiting deductions, along with enacting
spending cuts, to reduce the federal deficit.

There’s “no reason why we can’t have really strong growth
in 2013,” the president said in an interview with CBS
television yesterday before the network’s Super Bowl broadcast.
He cited a recovering housing industry, strong manufacturing and
rising car sales.

Revenue could be raised through an overhaul of the tax
code, he said, “and we can do it in a gradual way so that it
doesn’t have a huge impact.”

“There is no doubt we need additional revenue, coupled
with smart spending reductions in order to bring down our
deficit,” he said. “I don’t think the issue right now is
raising rates.”

Two reports last week suggested worrying signs about the
economy. The Commerce Department said Jan. 30 that the gross
domestic product, the value of all goods and services produced,
dropped at a 0.1 percent annual rate in the fourth quarter, the
worst performance since the second quarter of 2009, when the
world’s largest economy was still in the recession.

The fourth-quarter drop in GDP was largely due to a decline
in government outlays and a smaller gain in inventories that
subtracted a combined 2.6 percentage points from growth,
Commerce Department data showed Jan. 30.

Unemployment Rate

Two days later the Labor Department reported that the
unemployment rate increased to 7.9 percent from 7.8 percent,
even as employers added 157,000 jobs in January after a revised
196,000 advance in the prior month.

Obama said there are positive signs in the economy. “The
big problem was defense spending was cut 22 percent, the biggest
drop in 40 years,” he said. Business hesitated and defense
contracts were postponed or cut during the year-end debate over
the increased taxes and cuts in spending, known as the “fiscal
cliff,” that were part of a budget law enacted in late 2011.

“Washington cannot continually operate under a cloud of
crisis,” Obama said on CBS. “That freezes up consumers, it
gets businesses worried. We can’t afford these self-inflicted
wounds.”

He said the prescription for economic growth is through “a
balanced approach” of spending cuts and increases in revenue
that he said a majority of Americans agree with.

“We can’t have Washington dysfunction getting in the
way,” the president said.

‘Loopholes,’ Deductions

Obama said the government can cut health-care costs, though
he added that unspecified “loopholes” and deductions should
also be tightened or closed.

“If you combine those things together, then we can not
only reduce our deficit but we can continue to invest in things
like education and research and development that are going to
help us grow -- without raising rates again,” Obama said.

On other domestic issues, Obama said:

--“No I don’t” have any hesitation allowing women in
military combat, “because women, as a practical matter, are now
in combat.”

Women can do “everything a man can, and more,” he said,
adding that the government shouldn’t keep women from advancing
in the military.